Sharing the Austin Wealth Specialists April 2026 Markets Letter: Note this month’s highlights, a market review and summary with an update on the state of private credit, and the key takeaways of allocating in alternative investments during periods of uncertainty and increased volatility.

Whether you are seeking differentiated alternative investments, creative tax strategies, consistent income, or it’s long-term growth potential you’re looking for, the Austin Wealth Specialists Alternatives Platform is built to support your goals.

Note: Content compiled as of April 14, 6:00 p.m. CT.

This Month’s Highlights

Iran tensions continue to grip capital markets, with investors reacting to a 24-hour changing news cycle that is bringing constant volatility. A longtime resident of the Middle East recently shared this brief local insight.

A U.S. blockade of Iran’s ports has began on Monday after peace talks between the two countries ended without a deal over the weekend. But what will the blockade do and what are its risks? The BBC’s security correspondent Frank Gardner explains how it will work and its potential impacts across the globe: U.S. blockade of Iranian ports explained in two minutes.

Note: One can watch May 2026 Crude Oil (CL=F), in real time, Sunday thru Friday.

Investing in energy: See “Something to Consider” below as an interesting way to participate in energy as an asset class. Investing in tax-advantaged oil & gas, with the benefit of using bonus depreciation, allows investors to deduct a significant portion of their investment in the first year. Reducing taxable income and potentially lowering one’s tax liability by ~85-90%. Alternatively, one can invest in existing income-producing wells, possibly benefiting from regular monthly income that can grow as a result of higher oil prices.

You can still make two 2025 tax beneficial contributions to individual retirement accounts and health savings accounts up to April 15. Putting last-minute funds in stocks can offer both a tax break and boost long term retirement savings. If you haven’t maxed out your contributions for 2025, now is the time. For 2025, the IRA limit is $7,000, with an additional $1,000 allowed for savers ages 50 and over by Dec. 31, 2025.

For HSAs, the contribution limit for 2025 is $4,300 for self-only coverage and $8,550 for a family, with an additional $1,000 in catch-up contributions allowed for savers 55+. To contribute to an HSA for 2025, you must have been enrolled in a qualifying high-deductible health plan last year, and you can only make a family contribution if your dependents are on your plan.

Market Review & Summary

Last month, inflation rose to 3.3% from a year earlier—driven by rising gas prices. The first major inflation report since the Iran War began came in at the highest level in two years, but, it was in line with economists’ expectations. Prices excluding food and energy categories—the so-called core measure economists watch in an effort to better capture inflation’s underlying trend—rose 2.6%, slightly below forecasts.

The ever-important Consumer Sentiment Index plummeted to its lowest level on record due to frustration with price spikes from the war. The University of Michigan’s latest consumer survey showed that sentiment declined 11% early this month to a reading of 47.6, lower than anything seen in the post World War II era, including the Great Recession, the pandemic downturn and the historic inflation surge afterward. The U.S. Consumer has not yet said “uncle” on spending.

Update on Private Credit

On Tuesday, Moody’s Ratings downgraded the outlook for the U.S. business development company (BDC) sector. BDCs are vehicles that primarily invest in direct lending, a segment of private credit, and are commonly associated with “evergreen/interval” fund structures cited in recent headlines.

It is worth noting that not all private credit is direct lending and not all direct lending is in BDC fund structures.

Despite the outlook downgrade, Moody’s emphasized that most BDC ratings remain stable. This stability is supported by portfolios largely invested in senior secured, first-lien loans or those at the top of repayment priority, solid liquidity at the issuer level, and well-laddered debt maturities. The cautious outlook underscores the importance of disciplined underwriting, strong governance and robust risk management.

Moody’s believes it’s important to have an awareness of rating agency changes, but to also not over-weight them. Their expectation is that the markets will reconcile these issues on a fund-by-fund basis rather than escalate them to a systemic issue.

Private credit continues to serve an important role in global lending markets, and thoughtfully sourced and positioned opportunities can add value over time.

Worth Knowing

Lawrence E. Golub, CEO of Golub Capital, stated, “Some good news: enterprise software providers of systems of record generally performed well in the first quarter. Earnings growth of 4% in our software sample shows ongoing momentum in the sector, despite concerns about AI headwinds. The broader Golub Capital Altman Index has shown continued, albeit slowing, revenue and earnings growth for middle market companies over the last several quarters, including the first quarter of 2026. Our data suggests that the U.S. economy continues to grow.”

Although the overall increase in EBITDA and revenue for the last quarter remained relatively steady, both consumer and software companies exhibited resilient and impressive growth. The U.S. middle market showed strong performance in Q1 2026, with mission-critical enterprise software businesses achieving a 4% growth in earnings compared to Q1 2025.

Note: The Golub Capital Altman Index (GCAI) can offer early insights into the financial performance of public companies and GDP ahead of earnings season. Middle-market private companies within the Golub Capital Altman Index experienced a 1.4% year-over-year revenue growth in the first two months of 2026, while earnings remained unchanged compared to the previous year.

Something to Consider: Disciplined Tax Beneficial Energy Investing

Founded in 1980, U.S. Energy Development Corporation (U.S. Energy) is a privately held exploration and production (E&P) firm that manages assets for itself and its partners.

For more than four decades, U.S Energy has blended operational and financial innovation with a forward-looking approach. U.S. Energy has invested in, operated and/or drilled approximately 4,000 wells in 13 states and Canada and deployed more than $3 billion on behalf of its partners. The firm is active in all major US basins and currently maintains approximately 300,000 gross acres held by production (HBP) for potential future oil and natural gas development.

Our corporate motto, “Strive for Excellence” is more than just words. At U.S. Energy Development Corporation, it is a way of life.

Key Investment Features and Opportunities

Diverse Asset Ownership: Operating in all major US Basins with significant acquisitions in the Permian Basin, specifically focusing on Reeves and Ward Counties, Texas, often targeting high-growth areas.

Investment Structure: USEDC is known for creating direct investment opportunities, including potential tax-advantaged structures like Drilling Funds – offering high upfront Intangible Drilling Cost deductions.

Proven Track Record: With over 4,000 wells and 45 years in operation, we provide substantial experience in the sector.

Large-Scale Growth: The company has deployed over $3 billion on behalf of partners and is planning significant, potentially $1 billion+ deployments in 2026.

Operational Control: Unlike many firms that use third-party operators, USEDC typically acts as the operator for their projects.

Potential Advantages

Tax Benefits: Direct participation can offer significant tax benefits, which are a major component of this investment type.

Targeted Exposure: Investors can gain direct exposure to producing oil and gas assets rather than investing in broader energy ETFs.

Key Considerations

Risk Profile: Oil and gas drilling involves high risk, including geological risk and commodity price volatility.

Investor Eligibility: These opportunities are generally aimed at accredited or institutional investors.

Due Diligence: It is crucial to review specific offering documents (like Private Placement Memorandums) and understand all associated fees.

What We’re Watching: Allocating to Alternative Investments in Times of Uncertainty and Increased Volatility

Key Takeaways

Adding alternative investments (e.g., private equity, real estate, commodities) to a traditional stock-and-bond portfolio can significantly alter its risk-return profile by introducing performance drivers that function independently of public markets.

Key Benefits of Incorporating Alternatives

Broad Diversification: Alternatives typically exhibit low or negative correlation with traditional asset classes. This means they often do not move in lockstep with stocks and bonds.

Enhanced Risk-Adjusted Returns: Integrating alternatives can potentially deliver higher returns for the same level of risk, or lower risk for the same level of return.

Reduced Volatility: Because many alternatives are not publicly traded or are tied to tangible assets, they tend to experience fewer daily price swings, helping to “smooth the ride” during market turbulence.

Alternative investments are experiencing rapid growth, with global AUM projected to rise from $15 trillion in 2022 to over $24 trillion by 2028. The alts sector is increasingly driven by younger investors and private wealth, with retail allocations expected to grow significantly.

Growth and Market Size

Rapid Expansion: Alternative investments now sit at an estimated $22 trillion in assets under management (AUM), representing roughly 15% of global AUM.

Youth Movement: According to a Bank of America survey, Gen Z and millennial investors hold 17% of their portfolios in alternative investments, two to three times more than Gen X and baby boomers.

Private Wealth Shift: Alternative AUM for private wealth investors is forecasted to triple from $4 trillion to $12 trillion by 2034, reports Capgemini.

Institutional Allocation: Institutional capital allocation to alternatives is expected to peak near 25% by 2025.

Worth Noting: A Collection of Three Charts

This chart is worth paying attention to. As Mark Twain once said: “History doesn’t always repeat, but it often rhymes.”

S&P 500 on top, yield curve in the middle, Fed Funds rate on the bottom. Nearly 30 years of data. Before every major decline over the last three decades, the same pattern played out. New all-time highs. The yield curve inverts and then un-inverts. The Fed starts cutting rates.

The collection also includes the bullish case—four reasons the lows are likely in—and a look at what past corrections have looked like.

Understanding the Taylor Rule: A Guide for Central Bank Policy

The Taylor Rule is an influential formula developed by economist John Taylor that has shaped monetary policy strategy by linking interest rates to inflation and economic growth targets. This guideline is crucial for central banks aiming to stabilize economies, though it has been met with debates over its application and limitations, especially during times of economic instability.

Key Takeaways

The Taylor Rule is a formula that links a central bank’s policy rate to inflation and economic growth, aiming to stabilize the economy.

Developed by economist John Taylor in 1993, it assumes an equilibrium federal funds rate of 2% above the annual inflation rate.

The formula adjusts the rate based on the difference between actual and targeted inflation and real GDP growth, emphasizing inflation.

The Taylor Rule does not consider alternative monetary tools like quantitative easing or the challenges posed by negative interest rates. Although useful, the rule oversimplifies real-world complexities and doesn’t account for the Federal Reserve’s dual mandate of stable prices and maximum employment.

Call-to-Action Calendar

F2026 Financial Calendar Highlights — Q2 (April–June):

1. Tax Day (April 15): File income tax returns.
2. Mid-Year Checkup: Review budget vs. actual spending to make adjustments.
3. Emergency Fund: Ensure 3-6 months of expenses are saved.

This Month’s Thank-Yous

Charlie Bilello and his great weekly work @ The Week in Charts Newsletter.

Carson Investment Research Insights @ Carson Group Insights.

Let’s Talk About Your Allocation

If this month’s themes—energy, private credit, or alternatives in a volatile market—have you reconsidering your portfolio, reach out to Austin Wealth Specialists to talk through how these strategies might fit your goals and tax situation. Visit www.austinwealthspecialists.com for more news.

---

Disclosure: Securities offered through Quincy Wells Capital, LLC, Member FINRA SIPC. Investment Advisory Services offered through Vann Equity Management. Quincy Wells Capital, LLC, Vann Equity Management, and Austin Wealth Specialists are separate and unaffiliated. Educational only and not a recommendation or offer. Investing involves risk, including possible loss of principal. Not tax or legal advice. Consult your tax and legal advisors about your specific situation.